What the large print giveth, the small print taketh away!
The heart of a successful agency relationship is a workable agreement.
This holds true irrespective whether it’s for advertising, sponsorship, events management, sales promotions, licensing, merchandising, web design, hospitality, public relations or digital marketing.
And whether you find yourself client-side or agency-side, both parties need to reach a workable arrangement that’s proportionate to the value of the agreement for the marketing services to be delivered.
So from that perspective, it pays to do your due diligence.
From a client perspective, before holding a ‘pitch’ to determine which agency you’d like to work with – whether this is a new arrangement or whether you are looking to re-tender the marketing agency account – it’s prudent to carry out a company or bankruptcy search to ensure that the supplier is financially sound. This is especially true of smaller agencies or those that haven’t been trading for that long.
Any agency agreement worth its salt should explicitly state exactly what the client wants otherwise it won’t be clear what the agency should be delivering. In a nutshell, the agency agreement needs to cover the services provided; the standard of those services and the cost of the services delivered.
And as the relationship moves forward, there should also be a clear process agreed for refining the services and deliverables under the agency relationship, which needs to be collaborative rather than dictatorial.
It’s also unwise to rely on a clause that expects the agency to perform according to “best practice” and it’s preferable to spell this out in detail in order to describe the standard of services required.
This is in everyone’s best interests as it’s fair, open and transparent and avoids ambiguity and misunderstanding that can so often creep into these arrangements.
If the agency has developed the description or narrative of the service to be delivered, then from a client perspective you need to ensure that it’s ‘fit for purpose’ and meets your requirements. Ideally, the process of developing the service description should be collaborative, although this won’t always be possible, for example, following an EU tender.
Depending on the value of the agency services being procured, it’s worth considering inserting a provision by which the agency agrees that it’s carried out its due diligence in relation to the services it will deliver and consequently it employs a “no surprises or hidden costs” approach regarding the fees payable for those services. Most agencies now offer this as standard.
As a client, you’ll want to avoid a situation where the agency claims that it didn’t know that a particular circumstance existed and therefore wants to charge more for its services.
You should also consider continuous improvement in agency performance and how the agency services can be benchmarked over the longer term. Many agencies now expect this to be the norm.
Another important factor is the location of the agency and where it’s expected to perform and deliver its services under the agreement and the timescales for the delivery of those services.
It’s useful to draft an implementation plan with the agency in order to help manage expectations on both sides and maintain a workable relationship.
Although the implementation plan won’t form part of the main body of the agency agreement it should include a list of meaningful milestones, the components of each milestone, any particular relevant considerations and dates for completion.
The agency should be under a duty to mitigate any delay in achieving a milestone and the client should consider making time of the essence for delivery.
As part of the marketing agency agreement, it’s wise for the client to give itself enough flexibility to accommodate the changing demands of its employer, so the agreement needs to provide for a flexible change control procedure.
As a client, it’s prudent to take account of how pricing for these services will be accommodated as well as any additional consultancy time requirements.
Other considerations worth thinking about include:
#1: the pros and cons on entering an exclusive agency agreement where the agency can’t work for one of your direct competitors;
#2: a mutual non-disclosure clause that protects the use of confidential information;
#3: copyright in the materials produced, such as photographs, art work and other creative outputs as well as other intellectual property (IP) rights;
#4: attendance at weekly, monthly, half year and annual reviews of the performance of the agency according to the milestones and the implementation plan agreed;
#5: engagement of an independent third party consultancy to run an annual 360 degree review that its core objective is getting the most out of the relationship for the client and agency (usually with very large agency agreements);
#6: ensuring that any briefs (creative briefs should ideally be one page in length) are clear and unambiguous in order to save time and cost of re-doing work as well as producing better results faster and at a lower cost;
#7: payment terms (this can vary between 30 -60 days for fees and 30 -60 days in arrears for expenses) and ensure that invoices are properly submitted in order to comply with invoicing and other financial control requirements as well as a penalty interest clause for late payments;
#8: warranties and indemnities for goods and services created by third parties;
#9: duration of the agency agreement as well as grounds for termination and what events would be fundamental breaches and what events wouldn’t amount to fundamental breaches of the agreement and are capable of being remedied; and
#10: jurisdictional issues, choice of law and dispute resolution. In the latter, it’s typical in agency agreements to have a dispute resolution mechanism, such as escalation, and then mediation or arbitration where the costs are borne by both parties.
One final thought – if the agreement is one-sided then it’s likely to be fatally flawed and more than likely will fail to achieve its true potential.
Ardi Kolah is author of Guru in a Bottle® Essential Law for Marketers (£19.99) published by Kogan Page. Click the book to order your copy today!